CREFC boss spills tea on commercial market status.

The Commercial Real Estate Finance Council (CREFC) held its annual conference in Miami earlier this month, with over 3,000 attendees discussing the current state of the income-producing mortgage market. The outlook was found to be mixed, but relatively more optimistic than in previous years. Commercial mortgage-backed securities analysts at the conference predicted that overall issuance should increase, but highlighted the need to address problem loans. Lisa Pendergast, the executive director of CREFC, discussed these issues and the broader market outlook during the conference. She believes that banks will be cautious about putting commercial real estate on their books due to significant capital charges under the Basel III plan. As a result, she expects banks and other lenders to focus on securitization as a means of financing. Pendergast also addressed the role of Fannie Mae and Freddie Mac in the securitization market, noting that they have a strong program for multifamily lending. However, she acknowledged that refinancing difficulties could lead to an increase in maturity defaults for loans originated during the COVID-19 pandemic. In terms of office-to-housing conversions, Pendergast explained that while the idea is appealing, it may not be feasible or economically viable for certain types of office properties. Smaller office buildings are more likely to be suitable for conversion. Overall, the commercial real estate market is facing challenges, but the multifamily sector is performing relatively well.